Commercial paper financing
Article Abstract:
A flexible financing tool capable of matching borrowings and investments with cash flow demands and return on investment goals, commercial paper has been defined as a corporation's IOU, an unsecured promissory note with a fixed maturity. The advantages of issuing commercial paper to meet short-term cash needs include: lower-than-prime interest rates, elimination of compensating balance requirements, exemption from registration requirements stipulated in the Securities Act of 1933, minimized default risks, and increased exposure to institutional investors on national markets. Commercial paper has been issued since the early 1800s. The amount of commercial paper outstanding for 1986 is $315 billion, whereas in 1970 the total amount outstanding was $33.5 billion. Commercial paper is a favorite financing vehicle for finance companies, which first used this technique in the 1920s.
Publication Name: Cashflow Magazine
Subject: Business
ISSN: 0196-6227
Year: 1986
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Selecting a lockbox network
Article Abstract:
A lockbox network providing national cash management can take one of four forms: bank alliance, in which independent banks are networked to receive and process payments from corporate customers; mail intercept, in which collection points are established at post offices by a single bank; regional processing, in which a bank sets up processing centers at regional locations throughout the country; and non-bank networks, in which a bank forms a joint venture with another corporation that has more customer locations than the bank, such as the joint ventures established by Chase Manhattan with Equitable Life Assurance and by Mellon Bank with Sears. Selecting the lockbox network appropriate for the corporation is discussed; more than 60 questions are included which should help decision-makers assess service charges, service levels, convenience and risk.
Publication Name: Cashflow Magazine
Subject: Business
ISSN: 0196-6227
Year: 1986
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Data sample key to lockbox analysis
Article Abstract:
A good lockbox study depends on the sampling methods employed, the characteristics of the sample, and the validity of the testing. The sampling technique must avoid bias while being accurate, cost-effective and reflective of the total remittance population, to improve cash flow and verify treasury management performance. With awareness of seasonality and a representative customer profile, a one-month sample is best. After limiting sampling error, data are chosen using techniques such as: random sample, stratified sample and random-stratified sample.
Publication Name: Cashflow Magazine
Subject: Business
ISSN: 0196-6227
Year: 1986
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